Annual Report - Mid-day Multimedia - 2009-2010

MID-DAY MULTIMEDIA LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

TO
THE MEMBERS,

Your Directors hereby present their 29th Annual Report on the business and
operations of the Company together with the Audited Financial Accounts for
the year ended 31st March 2010.



Financial Performance:

(Rs. In Lakh)
2009-10 2008-09

Profit before Interest, Depreciation,
Taxes & Exceptional Items 372 548

Less : Interest 121 118

Depreciation 1 97

Add: Exceptional & Extra Ordinary Items - (1,540)

Profit before taxes 250 (1,207)

Less: Provision for Taxation 54 151

Net Profit after Tax 196 (1,358)

Add: Balance brought from the previous year 2418 3,776

Total 2614 2,418

Profit available for appropriation 2614 2,418

Note: Previous years' figures are not comparable as in last year there was
3 months operation of publishing business. As required under the Accounting
Standards, Segment-wise financial statements, related party transactions,
calculation of earnings per share, provision of deferred tax liability and
Consolidated Accounts of the Company and its four subsidiaries are made a
part of the Annual Report. The consolidated statements of the company have
been prepared in accordance with Accounting Standard 21 on Consolidated
Financial Statements.

Company Performance:

The Company is operating in Publishing Business and Radio Business through
its subsidiaries, Midday Infomedia Limited and Radio Mid- Day West (India)
Limited respectively. Operations in the company represent income & expense
from financial and investment activities with its subsidiaries. The Company
has recorded a Net Profit after Tax of Rs. 196 Lakh for FY 2009-10 as
against loss of Rs. 1,358 Lakh during Last year.

Scheme of Arrangement:

The Scheme has been approved by the respective boards of Mid-Day Multimedia
Limited and Jagran Prakashan Limited.

This Scheme proposes to demerge the investment arm of Mid-Day Multimedia
Limited, holding investment in Midday Infomedia Limited, comprising of the
entire Publishing Business and all the assets, rights, claims, title,
interest, licenses, liabilities and authorities pertaining to the
Publishing Business ('Demerged Undertaking') and transfer it to Jagran
Prakashan Limited. The proposed demerger of the Demerged Undertaking
envisaged in this Scheme, is aimed at achieving the following business and
commercial objectives and is expected to result in the following benefits
for MML and the Transferee Company:

* Demerger of the Demerged Undertaking would enable MML to streamline its
operations by being focused in the Radio Business and explore strategic
options to grow the Radio Business and to rationalize its management,
businesses and finances;

* The Transferee Company's existing management expertise and quality system
in the print media sector are expected to further enhance the performance
of the Print Business.

* The strong marketing network across the country of the Transferee Company
is expected to bring to the Print Business new advertisers and thus
increase the advertisement revenue.

* The Transferee Company is expected to pass on the benefits of scale of
economy to the Demerged Undertaking which along with the Transferee Company
is also expected to benefit from various other synergies between the two
resulting in cost savings.

* The pan India presence of the Transferee Company through its various
publication brands and other media related businesses and the resources at
its disposal will help in meeting more effectively the high intensity
competition in Mumbai being faced by the Print Business and in rapid
expansion of various publication brands, internet properties and other
related activities of MIFL, thereby enhancing the value of MIFL and its own
business in the interest of all the stake holders of both the companies.

The respective boards of directors feel that the Scheme is beneficial to
the respective shareholders, creditors, employees and all stakeholders of
MML as well as the Transferee Company. The Scheme is expected to contribute
in furthering and fulfilling the objects of both the companies and in the
growth and development of their respective businesses.

Dividend:

In order to preserve cash for the operating businesses, your Directors do
not recommend any dividend for the financial year 2009-2010.

Fixed Deposits:

Your company has not accepted any fixed deposits and, as such, no amount of
principal or interest was outstanding as of the balance sheet date.

Directors:

In accordance with the provisions of the Companies Act, 1956 and Articles
of Association, Mr. Khalid Ansari and Mr. Adille Sumariwalla, directors
retire by rotation and are eligible for re-appointment.

Mr. I. Venkat has been appointed as an additional Director of the Company
with effect from 29.10.2009.

Mr. Dilip Cherian has been appointed as an additional Director of the
Company with effect from 28.01.2010.

Mr. Nikhil Khattau has resigned as a Director from the Board as well as
from the Remuneration Committee w.e.f. 24.02.2010.

Mr. Rakesh Jhunjhunwala has resigned as a Director of the company on
20.04.2010 Corporate Governance

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance Practices followed by the Company
together with a certificate from the Company's Auditors confirming
compliance is set out in the Annexure forming part of this Report.

Directors' Responsibility Statement:

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors
based on the representations received from the Operating Management,
confirm that:

1. In the preparation of the annual accounts, the applicable accounting
standards have been followed and that there are no material departures.

2. They have, in selection of the accounting policies, consulted the
Statutory Auditors and have applied them consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial
year and of the profit of the Company for that year;

3. They have taken proper and sufficient care to the best of their
knowledge and ability, for the maintenance of adequate accounting records
in accordance with the provisions of the Companies Act, 1956, for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;

4. They have prepared the annual accounts on a going concern basis.

Auditors:

The auditors, M/s Haribhakti & Co., Chartered Accountants, retire as
auditors of the Company at the ensuing Annual General Meeting and have
confirmed their eligibility and willingness to accept office, if re-
appointed.

Subsidiary Companies:

As required under section 212 (1) (e) of the Companies Act, 1956, the
audited statements of accounts, along with the report of the Board of
Directors and respective Auditors' Reports thereon for the year ended March
31, 2010 relating to the following subsidiaries of the Company are annexed.

* Midday Infomedia Limited

* Radio Mid-Day West (India) Limited

* Mid-Day Broadcasting South (India) Private Limited

* Mid-Day Radio North (India) Limited, Mid Day Outdoor Limited

Particulars of Employees:

Particulars of Employees as required under Section 217(2A) of the Companies
Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as
amended, forms part of the Directors' Report. However, as per provisions of
Section 219 (1)(b)(iv) of the Companies Act, 1956 the Annual Report is
being sent to all shareholders of the Company excluding the aforesaid
information. Any member interested in obtaining such particulars may write
to the Company Secretary at the Registered Office of the Company.

Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the report of the
Board of Directors) Rules, 1988, particulars relating to the Conservation
of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
are also annexed.

Acknowledgement:

Your Directors take this opportunity to express their grateful appreciation
for the excellent assistance and co-operation received from the banks,
customers, advertisers, advertising agencies, bankers, Government
Authorities and all the local authorities. Your Directors also thank all
the shareholders for their continued support and all the employees of the
Company for their valuable services during the year.


For and on behalf of the Board of Directors
Of Mid-Day Multimedia Limited

Khalid A.H. Ansari
Chairman
Place: Mumbai
Date : May 5, 2010.

ANNEXURE 'A'

Statement pursuant to section 217(1) (e) of the Companies Act, 1956 read
with the Companies (Disclosure of particulars in the report of the Board of
Directors) Rules, 1988.

(A) Conservation of Energy:

The Company does not belong to category of power intensive industry and
hence consumption of power is not significant. However, the management
gives due importance for conservation of energy and also reviews from time
to time the measure taken/to be taken for reduction of consumption of
energy.

(B) Technology absorption, Research and Development: Not applicable

(C) Foreign Exchange Earnings and Outgo:

2009-10 2008-09
I) Foreign Exchange Earnings
Advertising Revenue NIL NIL

II) Foreign Exchange Outgo:

A) Expenditure in Foreign Currency on account of:

Particulars 2009-10 2008-09
(Rs. in lakh) (Rs. in lakh)

News/Subscription NIL 3
Traveling NIL 2
Conference & training NIL 0
Technical Services NIL 1
Total: NIL 6

B) C.I.F. Value of Newsprint Imports

Particulars 2009-10 2008-09
(Rs. in lakh) (Rs. in lakh)

C.I.F. Value of Newsprint Imports NIL 1,123

Note: Previous years' figures are not comparable as in last year there was
3 months operation of publishing business.

ANNXURE 'C' TO DIRECTORS 'REPORT

Disclosure pursuant to the provisions of Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999

Employee Stock Option Scheme -2005

a) Options outstanding at the beginning of the year 6,27,000

Options granted during the year NIL

b) The Pricing Formula At Par Value

c) Options Vested 29,000

d) Options Exercised (till 31.03.2010) 23,000

e) Total number of shares arising as a result
of exercise of options 23,000

f) Options Lapsed (will be re-issued to other
employees as per the scheme) 3,93,000

g) Variation of terms of Options NIL -There were no
variations in the
terms of Options

h) Money realized by Exercise of Options Rs. 2,30,000

i) Total number of options in force 30,000

j) Employee wise details of options granted to;

(i) Senior managerial personnel; NIL

(ii) Any other employee who receives a grant in any
one year of option amounting to 5% or more of option NIL
granted during that year.

(iii) Identified employees who were granted option,
during any one year, equal to or exceeding 1% of NIL
the issued capital (excluding outstanding warrants
and conversions) of the company at the time of grant;

Fair Value:

The fair value of the options used to compute pro forma net income and
earnings per share have been estimated on the dates of each grant using the
Black Scholes model.

The various assumptions considered in the pricing model are:

March 31, 2010

Dividend Yield NIL
Expected Volatility 25%
Risk Free Interest Rate 8%
Expected life of the options 852 days

Impact of fair value method on net profit and EPS

(Rs. in lakh)

Net Profit ( As per P & L a/c) 195.67

Add: ESOP expenses included in net Income (74.74)

120.92

Less: ESOP expenses determined under fair
value (Pro-Forma) (86.44)

Net Profit ( Pro-forma) 207.36

(Rs.)

Basic EPS (as reported) 0.37

Basic EPS (Pro-forma) 0.40

Diluted EPS (as reported) 0.37

Diluted (pro-forma) 0.40

Management Discussion & Analysis

Environment:

Fiscal year 2008-09 forced industries to relook at their future plans.
Industries were forced to draw plans with bottom line & cash flow focus.
Media Industry was no exception and ended up facing the most challenging
time during the last two years. The industry is significantly dependent
upon the advertising revenue and economic slow down has greatly impacted
the advertising spent across all the industries. Though revenues were
subdued during the year under review, the later part of the year created a
hope for the better advertising market in the coming times.

Group Performance:

Our businesses were also impacted due to a lackluster advertising market.
Group reported marginally lower top line of Rs. 12,492 lakh as compared to
Rs. 12,996 lakh in FY 2008-09. During the year, the Group concentrated on
operating costs and manage to reduce losses by 90% from Rs. 4,011 lakh to
Rs. 393 lakh.

Publishing Business:

The Publishing business was transferred from Mid-Day Multimedia Limited to
Midday Infomedia Limited (MIL) as on July, 2008. Therefore the publishing
business (MIL) represents 9 months of operation during FY 2008-09 and in
the current year it represents the full year of operation i.e 12 months.

As per Industry experts, the effect of Economic slowdown is clearly visible
on the revenues of the media houses especially operating in the Metro
cities due to their proximity to the International markets.

Our Publishing business grew by 8% during 2nd Half of the year over last
year laid by recovery in advertising market. Our operating team delivered
significant reduction in Newsprint, Employee and Selling & Distribution
cost. We rationalized our salary structure across board and as a result,
our staff cost is lower by 18%. The newsprint prices were also in the range
of USD 500 - 550 per metric ton during current year. Newsprint cost was
also lower on account of exchange rate and rationalization of its usage.

The continuous effort on rationalizing cost has resulted Publishing
business to achieve positive PBIT of Rs. 16.86 lakh in current year against
negative PBIT of Rs. 14.05 lakh in FY 2008-09.

Radio:

The pie of the industry is gradually growing in the advertisement market
and is expected to be closer to the world average spent on radio to the
over all media industry. The Phase 2 license reforms changed the way in
which the Radio Industry was operating, and now the next big step in the
industry will be Phase 3 license reforms and announcement in support of the
industry by the Government to improve operating environment for the
existing players.

In the year under review, we have registered revenue growth of 8% in a
lackluster advertising market. Our Radio stations continued to control
their operating cost which also contributed to the improved financial
statements.

Future Outlook:

The Media and Entertainment Industry is expected to register a CAGR of 13%
over five years and would reach Rs. 1,091 billion in FY 2014. Print
industry is expected to reach at Rs. 269 billion in FY 2014 with a CAGR of
9%. Radio is expected to touch Rs. 16 billion by FY 2014 at a CAGR of 16%.
Like in the past, the revenue growth in both the segments will be highly
dependent on the landscape of advertising spend in the future. (Source:
FICCI Frames 2010)

Thus, As far as Media and Entertainment Industry is concerned, the long
term outlook remains buoyant with steady market recovery in a short run.

Financial Performance:

Company Financials:

Operations in the company represent income from financial and investment
activities with its subsidiaries. During the year, Company has registered
profit before tax of Rs. 250 lakh with the tax expense of Rs. 54 lakh. As a
result, the Company has recorded a Net Profit after Tax of Rs. 196 lakh for
FY 2009-10.

Group Financials:

At Group level, The Company has earned Operating revenue Rs. 12,492 lakh
against 12,996 lakh of previous year. During the year, the company has
recorded operating profit before interest, taxes and exceptional items Rs.
413 lakh against loss of Rs. 2,860 lakh for FY 2009-10.

For better understanding, group financials have been analyzed separately
for publishing Segment and Radio Segment.

Publishing Segment:

Publishing Revenue in FY 2009-10 has registered a decline of 7% from Rs.
10,196 lakh to Rs. 9,485 lakh as compared to previous year as a result of
weak advertising market condition primarily during the first half of the
year.

Cost analysis:

The cost structure of Publishing segment as a proportion to Net sales is
analyzed in the table below:

Particulars Current Year (% to Previous Year (% to
(Rs. In lakh) Net Sales) (Rs. In lakh) Net Sales)

Cost of of printing 2,668 28 5,362 53

News Expenses 219 2 274 3

Employee Cost 2,675 28 3,265 32

Selling And
Distribution 789 8 1,018 10

Other Operational
Exp. 1,154 12 1,277 13

Interest & Finance
Charges 385 4 333 3

Depreciation 265 3 304 3

Note: Above figures represent full 12 months of operations of publishing
business in Midday Infomedia Limited in curent year and 9 months of
operations in last year in Midday Infomedia Limited and 3 months of
operations in Midday Multimedia Limited.

Cost of Printing:

The cost of printing has declined substantially by 50% from Rs. 5,362 lakh
in 2008-09 to Rs. 2,668 lakh in FY 2009-10. This is mainly because price of
newsprint was cheaper by 42% as compared to earlier year. Also, favorable
exchange rate during the year had helped to bring down the newsprint cost.

News Expenses:

News expenses are at Rs. 219 lakh in FY 2009-10 as compared to Rs. 274 lakh
in the previous year.

Employee Cost:

Employee cost has declined by 18% from Rs. 3,265 lakh to Rs. 2,675 lakh as
a result of measures taken to curb staff cost to practical levels to
counter the recessionary trend.

Selling & Distribution Cost:

Selling & Distribution expenses are at Rs. 789 lakh in 2009-10 as compared
to Rs. 1,017 lakh in FY 2008-09, registering a decline of 23%.

Other Operational Expenses:

Other operational expenses have decreased by 10 % to Rs. 1,154 lakh from
Rs. 1,277 lakh in the previous year.

Depreciation:

Depreciation (including amortisation) is Rs. 265 lakh in FY 2009-10 as
compared to Rs. 304 lakh in previous year.

Finance charges:

Interest and Finance charges are at Rs. 385 lakh in FY 2009-10 as compared
to Rs. 333 lakh in FY 2008-09.

The Publishing segment has registered profit before tax Rs. 1,436 lakh as
compared to loss of Rs. 1,693 lakh in FY 2008-09.

Radio Segment:

Operating revenues for this segment for FY 2009-10 have registered a growth
of 8% from Rs. 2,803 lakh to Rs. 3,031 lakh in FY 2008-09 despite the
economic slowdown.

Cost Analysis:

cost structure of Radio segment as a proportion to Net sales is analyzed in
the table below:

Particulars Current Year (% to Previous Year (% to
(Rs. In lakh) Net Sales) (Rs. In lakh) Net Sales)

Radio license fees 338 11 326 12

Employee Cost 794 26 914 33

Operating expenses 1,389 46 1,310 47

General and
Administration exp. 685 23 755 27

Interest & Finance
Charges 860 28 1,024 37

Depreciation 1,153 38 1,111 40

Radio License Fees:

Radio license fees have increased to Rs. 338 lakh from Rs. 326 lakh in the
previous year.

Employee Cost:

Employeecost has decreased from Rs. 914 lakh to Rs. 794 lakh. This is a
result of cost rationalisation.

Operating Expenses:

Operating expenses are at Rs. 1,389 lakh in FY 2009-10 as compared to
Rs.1,310 lakh in FY 2008-09.

General & Administration Expenses:

The lower advertising spend has resulted into decrease in the general &
administration expenses by 10% from Rs. 755 lakh to Rs. 685 lakh in the
previous year.

Depreciation:

Depreciation (including amortization) is Rs. 1,153 lakh in FY 2009-10 as
compared to Rs. 1,111 lakh in previous year.

Finance charges:

Interest and finance charges are at Rs. 860 lakh in FY 2009-10 as compared
to Rs. 1,024 lakh in 2008-09 registering 16% decrease.

As a result the Net Loss after tax for this segment is at Rs. 1,522 lakh
against Rs. 1,746 lakh in the previous year.

CAPITAL EMPLOYED:

For the Company:

Own Funds:

During the year company has made allotment of shares under ESOP scheme on
account of which share capital of the company has increased to Rs. 5,230
lakh from Rs. 5,223 lakh.

Loan Funds:

Loan fund of the company comprised unsecured loan of Rs. 930 lakh as
against unsecured loan 995 lakh in previous year.

Gross Block:

The Gross Block has decreased to Rs. 45 lakh from Rs. 57 lakh.

Investments:

Investment of the company has increased from Rs. 9,631 lakh to Rs. 12,206
lakh. The Company has invested Rs. 2,577 lakh in Radio subsidiary and
liquidated 2 lakh of other investment.

Net Current Assets:

The Company has cash and bank balances of Rs. 0.84 lakh as on balance sheet
date.

Other current assets which represents sale consideration receivable from
MIL on account of slump sale transaction is Rs. 1,686 lakh as on March 10
as against Rs. 2,344 lakh as at last March 09 on account of receipt from
MIL.

Loan and advances balances have reduced from Rs. 5,185 lakh in FY 2008-09
to Rs. 3,269 lakh in FY 2009-10 because of repayment of loan by radio
subsidiary.

Current liabilities and provisions have decreased from Rs. 103 lakh to Rs.
36 lakh as on March 2010.

Rewards and Recognition:

MiD DAY has been bagging international as well as Indian awards
consistently year on year for its Innovative Brand Properties and also for
customized Innovations for Clients and Brands.

During the year your Company brings home the following awards:

4 ASIAN MULTIMEDIA PUBLISHING AWARDS- Manila, Philippines

* MiD DAY's Bollywood Lunch Contest won an Excellence Award in the
Multimedia Communication category

* MiD DAY Happy Hours @ Work won an Excellence Award in the Multimedia
Communication category and Advertising Delivery category

* MiD DAY Corporate Cricket League won an Excellence Award in the
Multimedia Advertising Delivery category

IFRA Asia Awards:

Prestigious award for the MiD DAY's Visa + Pizza Hut IMPACT & ACTIVATION in
the Cross Media Advertising Category

Indian Digital Media Awards:

Silver Honours at the first ever Indian Digital Media Awards (IDMA) for the
Best News Site of the Year.

INMA (New York) with 1 Gold, 3 Sliver, 2 Bronze Highest number of awards
across the world

* Gold and Silver in the category of Marketing Campaign that had the most
profound effect on business

* Silver and Bronze for initiative of 'Vodafone Presents India 9to5'.

* Silver and Bronze for 'Don't Talk and Drive & Don't Drink and Drive
Campaign' in the category of Public Relations and Community Service

Human Resource Management:

Employee Internal Employee Satisfaction Survey revealed very healthy
employee satisfaction index once again, with improvement in some areas over
last year. This shows that employee relations within the company continues
to be positive. The focus this year has been to align departmental and
individual KRAs with the larger organizational objectives. As a first time
initiative, we have put in place quantifiable performance parameters for
senior Editorial colleagues, thereby aligning content strategy with
business.

To counter recessionary trend in the economy and its impact on business,
effective measures were taken to curb staff cost to practical levels. The
Management's constant focus on employee engagement and satisfaction has
contributed to retaining key talents in both the businesses.

Employee Stock Option:

To enable employees to participate in the future growth and success of the
company, the Company had instituted an Employees Stock Option Scheme 2005.
The Company has obtained Shareholder's approval at the EGM held on January
8, 2007 to grant 10,00,000 Options to the 'TRUST' Mid Day Exports Private
Ltd.' formed for grant of ESOPs to employees.

The Employee Stock Option Scheme 2005 is in accordance with the Securities
and Exchange Board of India (Employee Stock Option and Employee Stock
Purchase Scheme) Guidelines, 1999.The eligibilities and number of options
to be granted to an employee is determined on the basis of the employee's
work performance and approval of the compensation committee.

As of 31st March 2010, 23,000 options have been exercised by the employees.
Other statutory disclosures as required by the revised SEBI guidelines on
ESOPs are given in the Annexure to this report.

None of the management employees or whole time directors have received
options exceeding 5% of the value of the options issued for the year ended
March 2010. Likewise, no employee has been issued share options, during the
year, equal or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the company at the time of grant.

Adequacy of Internal Controls:

Mid-Day Multimedia Limited has an internal audit and control system. The
company has appointed a firm of chartered accountants, ASP & Co., as
Internal Auditors. The internal audits are conducted at regular intervals
and a report is submitted to the Audit committee at its meeting held every
quarter. Besides this, special audits are also carried out from time to
time. An extensive programme of internal audit supplements the internal
control systems. Internal Audit at Mid-Day Multimedia Ltd includes
evaluation of all operations and use of information technology. The audit
committee of the company reviews the findings and directs the senior
management to take effective steps to upgrade these systems for better
control.

Cautionary Statement:

Statements in this Report, particularly those which relate to Management
Discussion and Analysis, describing the Company's objectives, projections,
estimates and expectations, may constitute 'Forward Looking Statements'
within the meaning of applicable laws and regulations. Your Company
undertakes no obligation or liability to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise actual results, performance of achievements could
differ materially from those either expressed or implied in such forward-
looking statements. Readers are cautioned not to place undue reliance on
these forward looking statements and read in conjunction with financial
statements included herein.